Answer to Question 1:
Face Value = $1,000
Current Price = $1,050
Annual Coupon Rate = 8%
Semiannual Coupon Rate = 4%
Semiannual Coupon = 4%*$1,000 = $40
Time to Maturity = 12 years
Semiannual Period to Maturity = 24
Let semiannual YTM be i%
$1,050 = $40 * PVIFA(i%, 24) + $1,000 * PVIF(i%, 24)
Using financial calculator:
N = 24
PV = -1050
PMT = 40
FV = 1000
I = 3.683%
Semiannual YTM = 3.683%
Annual YTM = 2 * 3.683%
Annual YTM = 7.366% or 7.37%
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